Can you slipstream SP2 into Windows Vista/Server 2008?

I get questions like this all the time, but now I can at last provide some good news, courtesy of Microsoft:

Short Answer:

Yes, you can slipstream SP2 and doing so is recommended for XP upgrades.

For RTM upgrades, the stand alone install pack is easier to deploy.

Long Answer:

Client Installation:

An integrated installation (also known as "slipstream installation") means that the service pack is integrated into the operating system, and therefore the operating system and service pack are installed simultaneously. You can use the integrated installation to upgrade computers running Windows XP and to perform clean installations on computers that do not have an operating system.

Standalone SP2 DVD (also known as a ‘Patch DVD’) may be used to upgrade computers that already are running the Windows Vista operating system with Service Pack 1. The download size of the stand-alone package is larger than the package applied with Windows Update. This method is recommended for: 1) applying Windows Vista SP2 to computers without (or with limited) Internet connectivity; and 2) applying the service pack to more than one computer using deployment tools such as Systems Management Server 2003 (SMS) or System Center Configuration Manager 2007 (SCCM).

Server Installation:

There are two ways: 1) an update will be available via download at no charge for existing installations of Windows Server 2008; and 2) the SP2 updates will be incorporated (or slipstreamed) into Windows Server 2008 moving forward.

By the way, Windows Vista/Server 2008 RC1 is now available for TechNet and MSDN subscribers if you'd like to test it. A public release will occur soon as well.